THE LOAN PRODUCT EVERY PROPERTY INVESTOR NEEDS TO KNOW ABOUT
Posted on: 12 Jun 2018
THE LOAN PRODUCT EVERY PROPERTY INVESTOR NEEDS TO KNOW ABOUT
Debt Depletion Products, Pivot loans, also called loan reducers, are only available to borrowers who have a home loan and an investment loan at the same time. It shifts the interest from the home loan, which is not tax deductible, to the investment loan, turning it into a fully tax deductible loss.
Inception Finance has managed to create a Debt Depletion Portfolio Product for clients to take advantage of while the regulatory product window stays open.
While it might sound too good to be true, the Australian Taxation Office gave pivot loans the green light in a 2015 product ruling.
Canstar home loan expert Steve Mickenbecker said the pivot loan was a toned-down version of a “negative gearing on steroids” arrangement that was popular in the 1990s.
Bessie Hassan, money expert at comparison website Finder.com.au, said pivot loans were a “customised product allowing borrowers to bundle both an owner-occupier loan and an investment loan with the same bank”. (Chung, 2018)
